If a corporation has a large balance in retained earnings, it will have enough cash to pay a dividend.

Question

Quizplus · Accepted Answer

While a corporation with a large balance in retained earnings may have enough cash to pay a dividend, it is not a guarantee. Retained earnings are profits that have not been paid out as dividends and are often used for reinvestment back into the company. Additionally, a corporation may choose to hold onto their retained earnings for various reasons such as future expansion, debt repayment, or economic uncertainty. Ultimately, the decision to pay a dividend depends on the corporation's financial goals and management's discretion.

If a Corporation Has a Large Balance in Retained Earnings